How to outsource payroll, from SaaS to BPO

It’s a common misunderstanding that outsourcing means completely handing over the keys to your payroll. Granted, there are formulas that come close, such as business process outsourcing (BPO), but payroll outsourcing comes in many shapes and formats. This overview will help you to choose the option that best fits your needs.

Option 1: Software-as-a-Service (SaaS) With SaaS, you pay a monthly or yearly fee to a payroll outsourcing partner for a subscription to a cloud-based payroll platform. Your own team then uses the platform to run your payroll. This plug-and-play solution gives you instant access to proven payroll technology that can often easily be integrated with your current HR tools, ERPs and other systems. Moreover, your partner will provide regular updates for the payroll platform and will scale down or up with you. Example: You’re an SME with 32 employees and still work with disparate, on-premise systems that show more and more weaknesses every year. You don’t want to invest in a robust payroll ecosystem. What you do want is giving your payroll process a quick and cost-effective digital makeover without handing over the keys to it. In that case, spreading out your IT investment through SaaS looks like your go-to option.

Option 2: on-site staffing

If your goal is to find a solution to reinforce your team during peak periods or unexpected staff shortages, you can temporarily hire one or more payroll experts from a payroll partner. They give you extra hands as well as expertise, guaranteeing that you don’t have to adjust your objectives or planning. Good to know: this isn’t just an emergency solution. Many companies count on extra staffing to cover recurrent workload peaks, such as the end-of-year period or the calculation of holiday allowances.

Example:

Your payroll officer is on maternity leave and her backup just dropped out with the flu. Now what? Well, for example, you could contract a payroll expert two days a week until your own team is back on its feet. Nice extra: on a next occasion, you can ask for the same person, who’ll already know your team and organisation by then.

Option 3: payroll and process optimisation

Payroll is bound to strict rules and fixed calculations. That should make it one of the most standardised and automated HR processes out there. Nevertheless, many HR departments still (partly) hold on to largely manual and complex processes. A trusted payroll partner can help to assess possible points of improvement from a fresh perspective. They can also assist in documenting your payroll process, making it easier for replacements to get up to speed quickly in times of need.

Example:

You sense that your payroll and related processes could do with an efficiency boost, but you can’t quite put your finger on it. That’s why you ask for a payroll scan, which evaluates your team, knowledge, systems and processes. The resulting feedback serves to determine a course of action to tackle some or all of the proposed initiatives for optimisation.

Option 4: business process outsourcing (BPO)

BPO means handing over the responsibility for one or more of the most outsourceable payroll tasks to a partner – a strategic decision. This often implies a long-term, off-site cooperation with payroll experts. A solid preparation and transparency are vital to take advantage of all the benefits of payroll outsourcing . Clearly communicate which tasks you outsource and why, as well as who employees can contact when they have questions. During the start-up phase, your partner can already clear up numerous doubts through info sessions and workshops.

Example:

You’d like to create time for a new recruitment and internal mobility policy by outsourcing your payroll duties. However, you would rather continue to manage your own insurance matters (for the time being). That’s possible. You’ll pay a monthly fee, and in return, your outsourcing partner will automate and optimise your payroll as much as possible, while regularly reporting to you.